Ayala Land to offer P2B in homestarter bonds

SCREENGRAB from www.ayalaland.com.ph

Philippine property giant Ayala Land Inc. plans to offer as early as next month about P2 billion worth of “homestarter” bonds—an innovative instrument that will enable bondholders to build up seed money to buy a residential unit in the future.

ALI chief finance officer Jaime Ysmael said while the property firm had earlier obtained board approval to issue as much as P5 billion worth of new homestarter bonds, the amount would likely be offered in tranches. The initial P2-billion tranche may be issued in September or October, Ysmael said at the sidelines of the Philippines Property Awards 2014 Tuesday night.

Ayala Land has an existing authority from the Securities and Exchange Commission to issue another P7 billion in retail bonds—the last of the P15-billion offering approved by corporate regulators.

But because ALI has no urgent need to raise the remaining P7 billion, Ysmael said, the next retail offering can wait until early next year.

But Ayala Land, he said, will proceed with the rollout of the homestarter bonds.

Asked whether the upcoming series would carry the same terms as previous offerings, he said: “We’re trying to see if we could maintain the same terms because [market] interest rates have slightly increased, but it should still be within the 4-5 percent range.”

The planned offering will be the seventh of Ayala Land’s series of homestarter bonds, which was launched in 2006. The last offering was issued last year. It was worth P2 billion and had a tenor of three years and a coupon rate of 4 percent per annum.

This offering targets retail investors who wish to set aside funds that may be used as full or partial down payment in the purchase of an Ayala Land property. Bondholders would earn a bonus credit through the program—a special discount on the net selling price of various ALI properties should the bondholder decide to apply the principal amount and accrued interests, net of taxes, as down payment to buy an Ayala Land property.

For those who, for some reason, need to unload their bonds ahead of maturity, they can opt to sell them over the counter with the help of partner-banks.

Eligible investors, whether Filipino citizens or resident foreign individuals, can buy a minimum of P50,000 worth of homestarter bonds, and in multiples of P10,000 thereafter. The maximum investment is P5 million.

Ayala Land expects to bring to the property market more inventory in the second half of the year. This is to meet the company’s rough target rollout of up to 30,000 residential units for the full year, of which only about 5,500 had been launched in the first semester, Ysmael said.

ALI grew its first semester net profit by 25 percent year-on-year to P7.1 billion on the back of a double-digit growth across its residential development, shopping mall, office, tourism as well as construction and property management businesses.